Liberty Mutual has vowed to continue its court fight against charges begun by former New York Attorney General Eliot Spitzer that it engaged in anti-competitive bid-rigging and broker compensation practices after a judge declined the insurer’s bid to dismiss the attorney general’s suit.

New York Supreme Court Judge Bernard Fried ruled this week that the state’s suit could go forward against Liberty Mutual subsidiaries that do business in New York, although he did agree that Spitzer’s office had no jurisdiction over Liberty Mutual’s Boston-based holding company and dropped that entity from the suit.

“Liberty Mutual is both pleased and disappointed with the court’s ruling,” John Cusolito, Liberty Mutual vice president and manager for external relations, said in a statement. “We are pleased that Liberty Mutual Holding Co. was dismissed from the matter. We are disappointed that the court did not accept our substantive arguments.”

Cusolito said the court case will continue. “We continue to believe that the matter needs to be resolved through the judicial process. This is the first step in that process and we fully expect that we will prevail eventually,” he added.

Unlike American International Group, Zurich, ACE and other insurers that have settled similar charges, Liberty Mutual Insurance Group decided last May to fight allegations of anti-competitive practices brought against it by the attorneys general of New York and Connecticut.

The Boston-based insurer has maintained that charges regarding improper commissions and bid-rigging are untrue and overblown and has refused to settle with the states. Last May, Liberty Mutual said it had been unable to reach a resolution and believed the states’ settlement demands were excessive.

“We have tried to reach resolution and can only describe their settlement demands as excessive and unreasonable: both in terms of magnitude and in their demands that we change legitimate business practices in states outside their legal jurisdictions,” the company said in a statement at the time.

“We have declined these demands and are preparing to resolve the issues in court,” that statement added.

The insurer took its stand following the filing of complaints by then-New York Attorney General Eliot Spitzer and Connecticut Attorney General Richard Blumenthal. The complaints described alleged cooperation of Liberty Mutual employees from 2001 through 2004 in a bid-rigging scheme in which the employees provided large insurance broker Marsh with so-called “B” quotes for excess casualty accounts. The quotes were intentionally less favorable than other insurers’ quotes.

In August 2005, a former Liberty Mutual executive, Kevin Bott, pled guilty to criminal charges in connection with big-rigging conduct while employed at Liberty Mutual.

The complaints also found fault with Liberty Mutual for paying contingent commissions — or what the attorneys general call “kickbacks” and “payoffs” — to insurance brokers and independent agents to encourage them to place more business with Liberty Mutual.

“Brokers and agents responded to these incentives, steering their clients to Liberty Mutual and in many cases violating their fiduciary duty to assist their clients in finding the best insurance for the lowest price,” according to Spitzer.

“It is simply appalling that a major financial institution would rig bids and induce brokers and agents to abuse their position of trust with the insurance-buying public,” Spitzer said at the time.

The case is now being pursued by Spitzer’s successor as attorney general, Andrew Cuomo.

A number of other insurers agreed to alter their commission payment practice to settle with the states. But Liberty Mutual has defended its compensation practices as appropriate and lawful.

As for the bid-rigging charges, Liberty Mutual has not denied that former employees engaged in bid-rigging but insists it is not a common company practice as alleged.

“Unfortunately, two former lower level employees seriously violated our trust and our standards of conduct in their quotation activity. One employee left in 2001 and the other resigned in the course of our investigation in 2005. Liberty Mutual has a culture not just of compliance, but of ‘doing the right thing,'” the insurer said.